In light of the outcome of the UK’s referendum on EU membership, we wanted to share a few initial thoughts from Stephen Saint-Leger, a Managing Director in our London office and the author of our research brief on “Brexit” published in April.

The victory of the “Leave” camp in the “Brexit” referendum will open a Pandora’s box for the U.K., the rest of Europe and the global economy.

The first casualty could well be the UK’s political system. The referendum is only “advisory,” meaning that an Act of Parliament will need to be passed to initiate the process of separation. There is scope for chaotic scenes if the pro-Brexit group of Conservative MPs fails to be joined by enough fellow lawmakers across the parties to command a majority to pass the Act.

Assuming Parliament does pass such an Act, the European Union will likely play hardball in negotiations, in order to make an example out of the UK and to underscore its core principles: in particular, that there can be no free trade access without the free movement of people. Since the trump card of the Leavers was regaining control over borders, it is reasonable to expect UK export goods to face tariffs, and services to the EU—asset management, for example—to be restricted. Also, reciprocal restrictions on the ease of travel to the continent and the length of permitted stay by UK citizens are likely to appear.

What does this mean for investors? It is not all bad. UK equities should benefit from the depreciation of Sterling. Global equities, on the other hand, may tumble, as investors interpret the successful populist backlash against the status quo as the thin edge of the de-globalization wedge. But a prolonged downdraft in equity markets that threatens to spill over into the real economy is likely once again to trigger a response by the authorities—for example, a temporary suspension of fiscal austerity measures. This could actually provide an attractive opportunity to re-balance into equities.

As far as fixed income is concerned, UK gilts and other European government bonds are already discounting low or no real growth—so they may continue to remain unattractive. UK real estate may also struggle: investors should review their exposure to this already-expensive asset class because of the expectation that occupancy levels could fall and rents soften.

Of course, if popular opinion turns during the UK-EU trade negotiations, one should not preclude the possibility of a second referendum. After all, the Irish went back to vote on an EU-related constitutional issue six months after having voted for the “wrong answer” in June 2008—so beware jumping to conclusions too soon.